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Job picture in Illinois not as bright as elsewhere, report indicates

Mark Reutter, Business & Law Editor
217-333-0568; mreutter@illinois.edu

Released 6/20/2007

CHAMPAIGN, Ill. — Illinois lags behind the nation and neighboring states in job creation, a report by the Institute of Government and Public Affairs at the University of Illinois finds.

Between 1996 and 2005, non-farm employment in Illinois grew by only 3 percent, below the 4 percent average of six other Midwest states and considerably less than the nearly 12 percent expansion of the U.S. economy.

Not only did Illinois lose a higher proportion of manufacturing jobs than did the U.S. or other Midwest states, but it gained relatively few jobs in the financial sector and shed some jobs in the transportation sector – areas that “Illinois might have been expected to do better than the nation,” Geoffrey J. D. Hewings, an Illinois professor of economics and geography, wrote.

Chicago accounted for 92 percent of the net job gains in the state between 1996 and 2005, but the metropolitan area’s growth rate of 4.14 percent underperformed both the national economy and several regional economies in Illinois.

“An issue often raised is that Illinois has the ‘wrong structure’ in terms of the allocation of economic activity by major sectors,” Hewings wrote. “However, it turns out that the state and the nation have very similar structures; the problem appears to be that on a sector-by-sector basis, Illinois’ growth rates have been lower than those for the U.S. as a whole.”

No single sector in Illinois, including information, health services, government and education, equaled the employment gains in comparable sectors at the national level.

Illinois did outperform six Midwest states in three areas – construction, professional and business services, and leisure and hospitality. The six states were Indiana, Iowa, Michigan, Missouri, Ohio and Wisconsin.

Only one Metropolitan Statistical Area (MSA) beat the national employment record. Bloomington-Normal had a net growth of 13,200 jobs between 1996 and 2005, or 17.25 percent.

The next highest employment gain was found in Champaign-Urbana (6.49 percent), followed by Rock Island and Moline (5.59 percent), Peoria (4.61 percent), Metro-East opposite St. Louis (4.27 percent) and Chicago (4.14 percent).

Four MSAs recorded net job losses between 1996 and 2005. They were Decatur (-4.57 percent), Rockford (-1.78 percent), Kankakee (-1.40 percent) and Springfield (-0.18 percent).

“It is not clear why the state’s growth rates have lagged behind those in the nation,” Hewings wrote, although one factor seems to be that 40 percent of Illinois exports go to other Midwest states that also have slow employment growth rates.

“With both population and the labor force expanding, the inability of the state’s economy to grow jobs presents a major challenge for policymakers,” he concluded.

Hewings’ article is contained in “The Illinois Report 2007,” a group of essays by Illinois scholars on various policy issues, including energy and environment, immigration, health care and elementary and secondary school education.